Wednesday, April 29, 2009

Krugman on climate change economics

As someone with a dust covered PhD with Krugman's name all over it, it is good to see that he has also seen the light and that "trade and the environment" is the future.

Krugman is still da man.

H/T: Env-econ

Anti-green economics [NY Times]

Clearly, opposition to doing something about climate change has fallen back to a new position: claims that attempting to limit greenhouse gas emissions would be incredibly costly. Yet the most careful studies, like the big MIT study of Congressional proposals, find only modest costs. Pay no attention, say the critics.

Via Pete Davis, I found Robert Samuelson’s latest, which Davis thinks was wonderful; all I can say is, huh?

Here’s the key graf in which Samuelson tries to deny the results of the studies:

The trouble is that these models embody wildly unrealistic assumptions: There are no business cycles; the economy is always at “full employment”; strong growth is assumed, based on past growth rates; the economy automatically accommodates major changes — if fossil fuel prices rise (as they would under anti-global-warming laws), consumers quickly use less and new supplies of “clean energy” magically materialize.

I don’t think there’s a single thing there that’s right. What on earth do business cycles have to do with it? The models may assume growth based on past trends, but they DO ask whether emissions policy would greatly slow growth — and the answer is no. Consumers aren’t assumed to “quickly” use less — the time frame in these models is decades long. And new supplies don’t “magically” appear — they respond to price incentives, which is what economics usually says.

I don’t especially mean to pick on Samuelson, but this column exemplifies a strange thing about the climate change debate. Opponents of a policy change generally believe that market economies are wonderful things, able to adapt to just about anything — anything, that is, except a government policy that puts a price on greenhouse gas emissions. Limits on the world supply of oil, land, water — no problem. Limits on the amount of CO2 we can emit — total disaster.

Funny how that is.


Tuesday, April 28, 2009

Norway sees a silver lining to climate change

A recent PlanetArk article highlights the fact that not everyone loses from climate change. Norway is looking at the opportunities that it might throw up.

I suspect the thawing in the ice will lead to a freezing in relations between the large number of countries who have claims to the land and resources currently under the ice.

A military build up is inevitable and Norway may be uncomfortable being stuck between the Russians and Americans.

"Plenty Of Opportunities" From Arctic Thaw - Norway" [PlanetArk]

OSLO - A thaw of Arctic ice will open "plenty of opportunities" in oil and gas exploration and shipping even though the overall impact of global warming will be damaging for the region, Norway's Foreign Minister said.

Jonas Gahr Stoere, who will host a meeting of the eight-nation Arctic Council in the Norwegian city of Tromsoe on Wednesday, said now was the time to work out rules to head off potential disputes over resources in the polar region.

"I think there are plenty of opportunities," Stoere said of businesses looking to the Arctic. Arctic summer sea ice shrank in 2007 to its smallest since satellite records began.

"The resources, the new sailing lanes, these are all opportunities," he said in an interview with Reuters. The Arctic Council talks will be preceded on Tuesday by a meeting about melting ice, including a speech by former US Vice President Al Gore.

But Stoere said the Arctic thaw was damaging overall and would harm the hunting cultures of indigenous peoples. "They experience profound changes in the foundations of their livelihoods," he said.

Among new opportunities, an official US study last year estimated the Arctic had 90 billion barrels of untapped oil, enough to meet current world demand for three years.

And in 2007, the Northwest Passage between the Pacific and Atlantic Oceans opened for a first time in memory. Mining firms could also find new deposits.

The Arctic is warming far faster than the global average, according to the UN Climate Panel. Darker ocean or ground, once exposed, soaks up far more heat than reflective ice.

An ice-free Arctic Ocean could in turn accelerate climate change from Africa to Asia, Stoere said. Among those attending the meeting in Tromsoe will be Russian Foreign Minister Sergei Lavrov and US Deputy Secretary of State Jim Steinberg.

Stoere said he hoped that worries about the melt of the Arctic would help spur governments to work out a strong UN accord to fight climate change at a meeting in Copenhagen in December.


Among emerging disputes, both Russia and Denmark say the North Pole is part of their territory -- Moscow even planted a flag beneath the pole in 2007. Norway agreed northern limits to its territorial waters with a UN commission this month.

"Everybody can make easy predictions that when there are resources and there is a need for resources there will be conflict and scramble," Stoere said. "It need not be that way."

"All Arctic coastal states share an interest in stability," he said. The Arctic Council states are the United States, Russia, Canada, Finland, Sweden, Norway, Denmark and Iceland.

Stoere also said Arctic states might need more of a military presence. "The more activity there is, the more responsibility of the coastal states to ensure there is order," he said.

"Yes, we may need coastguard, we may need presence of military, naval forces...not as a threat (but) as a tool to settle disputes and to maintain order."

An oil spill, more tourism or industrial activity, for instance, demanded search and rescue ability and surveillance.


Friday, April 24, 2009

Waterworld and the growing crisis

The Economist does water. Some interesting statistics for those of us that like that sort of thing.

There are stormy waters ahead that is for sure.

What is the difference between a brownout and a blackout?

It does seem remarkable that a growing number of the worlds great rivers never reach the sea. That must be bad right?

The world's meat eating frenzy is also costly. This quote is also impressive:

So the shift from vegetarian diets to meaty ones—which contributed to the food-price rise of 2007-08—has big implications for water, too. In 1985 Chinese people ate, on average, 20kg of meat; this year, they will eat around 50kg. This difference translates into 390km3 (1km3 is 1 trillion litres) of water—almost as much as total water use in Europe.

Things will only get worse.

Sin aqua non [Economist]

THE overthrow of Madagascar’s president in mid-March was partly caused by water problems—in South Korea. Worried by the difficulties of increasing food supplies in its water-stressed homeland, Daewoo, a South Korean conglomerate, signed a deal to lease no less than half Madagascar’s arable land to grow grain for South Koreans. Widespread anger at the terms of the deal (the island’s people would have received practically nothing) contributed to the president’s unpopularity. One of the new leader’s first acts was to scrap the agreement.

Three weeks before that, on the other side of the world, Governor Arnold Schwarzenegger of California declared a state of emergency. Not for the first time, he threatened water rationing in the state. “It is clear,” says a recent report by the United Nations World Water Assessment Programme, “that urgent action is needed if we are to avoid a global water crisis.”

Local water shortages are multiplying. Australia has suffered a decade-long drought. Brazil and South Africa, which depend on hydroelectric power, have suffered repeated brownouts because there is not enough water to drive the turbines properly. So much has been pumped out of the rivers that feed the Aral Sea in Central Asia that it collapsed in the 1980s and has barely begun to recover.

Yet local shortages, caused by individual acts of mismanagement or regional problems, are one thing. A global water crisis, which impinges on supplies of food and other goods, or affects rivers and lakes everywhere, is quite another. Does the world really face a global problem?

Not on the face of it. There is plenty of water to go around and human beings are not using all that much. Every year, thousands of cubic kilometres (km3) of fresh water fall as rain or snow or come from melting ice. According to a study in 2007, most nations outside the Gulf were using a fifth or less of the water they receive—at least in 2000, the only year for which figures are available. The global average withdrawal of fresh water was 9% of the amount that flowed through the world’s hydrologic cycle. Both Latin America and Africa used less than 6% (see table). On this evidence, it would seem that all water problems are local.

The trouble with this conclusion is that no one knows how much water people can safely use. It is certainly not 100% (the amount taken in Gulf states) because the rest of creation also has to live off the water. In many places the maximum may well be less than one fifth, the average for Asia as a whole. It depends on how water is returned to the system, how much is taken from underground aquifers, and so on.

But there is some admittedly patchy evidence that, given current patterns of use and abuse, the amount now being withdrawn is moving dangerously close to the limit of safety—and in some places beyond it. An alarming number of the world’s great rivers no longer reach the sea. They include the Indus, Rio Grande, Colorado, Murray-Darling and Yellow rivers. These are the arteries of the world’s main grain-growing areas.

Freshwater fish populations are in precipitous decline. According to the World Wide Fund for Nature, fish stocks in lakes and rivers have fallen roughly 30% since 1970. This is a bigger population fall than that suffered by animals in jungles, temperate forests, savannahs and any other large ecosystem. Half the world’s wetlands, on one estimate, were drained, damaged or destroyed in the 20th century, mainly because, as the volume of fresh water in rivers falls, salt water invades the delta, changing the balance between fresh and salt water. On this evidence, there may be systemic water problems, as well as local disruptions.

Two global trends have added to the pressure on water. Both are likely to accelerate over coming decades.

The first is demography. Over the past 50 years, as the world’s population rose from 3 billion to 6.5 billion, water use roughly trebled. On current estimates, the population is likely to rise by a further 2 billion by 2025 and by 3 billion by 2050. Demand for water will rise accordingly.

Or rather, by more. Possibly a lot more. It is not the absolute number of people that makes the biggest difference to water use but changing habits and diet. Diet matters more than any single factor because agriculture is the modern Agasthya, the mythical Indian giant who drank the seas dry. Farmers use about three-quarters of the world’s water; industry uses less than a fifth and domestic or municipal use accounts for a mere tenth.

Different foods require radically different amounts of water. To grow a kilogram of wheat requires around 1,000 litres. But it takes as much as 15,000 litres of water to produce a kilo of beef. The meaty diet of Americans and Europeans requires around 5,000 litres of water a day to produce. The vegetarian diets of Africa and Asia use about 2,000 litres a day (for comparison, Westerners use just 100-250 litres a day in drinking and washing).

So the shift from vegetarian diets to meaty ones—which contributed to the food-price rise of 2007-08—has big implications for water, too. In 1985 Chinese people ate, on average, 20kg of meat; this year, they will eat around 50kg. This difference translates into 390km3 (1km3 is 1 trillion litres) of water—almost as much as total water use in Europe.

The shift of diet will be impossible to reverse since it is a product of rising wealth and urbanisation. In general, “water intensity” in food increases fastest as people begin to climb out of poverty, because that is when they start eating more meat. So if living standards in the poorest countries start to rise again, water use is likely to soar. Moreover, almost all the 2 billion people who will be added to the world’s population between now and 2030 are going to be third-world city dwellers—and city people use more water than rural folk. The Food and Agriculture Organisation reckons that, without changes in efficiency, the world will need as much as 60% more water for agriculture to feed those 2 billion extra mouths. That is roughly 1,500km3 of the stuff—as much as is currently used for all purposes in the world outside Asia.

The other long-term trend affecting water is climate change. There is growing evidence that global warming is speeding up the hydrologic cycle—that is, the rate at which water evaporates and falls again as rain or snow. This higher rate seems to make wet regions more sodden, and arid ones drier. It brings longer droughts between more intense periods of rain.

Climate change has three big implications for water use. First, it changes the way plants grow. Trees, for example, react to downpours with a spurt of growth. During the longer droughts that follow, the extra biomass then dries up so that if lightning strikes, forests burn more spectacularly. Similarly crops grow too fast, then wilt.

Second, climate change increases problems of water management. Larger floods overwhelm existing controls. Reservoirs do not store enough to get people or plants through longer droughts. In addition, global warming melts glaciers and causes snow to fall as rain. Since snow and ice are natural regulators, storing water in winter and releasing it in summer, countries are swinging more violently between flood and drought. That is one big reason why dams, once a dirty word in development, have been making a comeback, especially in African countries with plenty of water but no storage capacity. The number of large dams (more than 15 metres high) has been increasing and the order books of dam builders are bulging.

Third, climate change has persuaded western governments to subsidise biofuels, which could prove as big a disaster for water as they already have been for food. At the moment, about 2% of irrigated water is used to grow crops for energy, or 44km3. But if all the national plans and policies to increase biofuels were to be implemented, reckons the UN, they would require an extra 180km3 of water. Though small compared with the increase required to feed the additional 2 billion people, the biofuels’ premium is still substantial.

In short, more water will be needed to feed and heat a world that is already showing signs of using too much. How to square that circle? The answer is by improving the efficiency with which water is used. The good news is that this is possible: vast inefficiencies exist which can be wrung out. The bad news is it will be difficult both because it will require people to change their habits and because governments, which might cajole them to make the changes, are peculiarly bad at water policy.

Improving efficiency is doable and industrial users have done it, cutting the amount of water needed to make each tonne of steel and each extra unit of GDP in most rich countries (see first chart). This can make a difference. The Pacific Institute reckons that, merely by using current water-saving practices (ie, no technological breakthroughs) California, a water-poor state, could meet all its needs for decades to come without using a drop more.

Still, industry consumes less than a fifth of the world’s water and the big question is how to get farmers, who use 70-80%, to follow suit. It takes at least three times as much water to grow maize in India, for example, as it does in America or China (see second chart). In some countries, you need 1,500 litres of water to produce a kilo of wheat; in others, only 750 litres. It does not necessarily follow that water is being used unsustainably in the one place and not the other; perhaps the high-usage places have plenty of water to spare. But it does suggest that better management could reduce the amount of water used in farming, and that the world could be better off if farmers did so. Changing irrigation practices can improve water efficiency by 30%, says Chandra Madramootoo, of the International Commission on Irrigation and Drainage. One can, for example, ensure water evaporates from the leaves of the plant, rather than from the soil. Or one can genetically modify crops so they stop growing when water runs dry, but do not die—they simply resume growth later when the rains return.

The world might also be better off, at least in terms of water, if trade patterns more closely reflected the amount of water embedded in traded goods (a concept called “virtual water” invented by Tony Allan of King’s College London). Some benign effects happen already: Mexico imports cereals from America which use 7 billion cubic metres (m3) of water. If it grew these cereals itself, it would use 16 billion m3, so trade “saves” 9 billion m3 of water. But such beneficial exchanges occur more by chance than design. Because most water use is not measured, let alone priced, trade rarely reflects water scarcities.

To make water use more efficient, says Koichiro Matsuura, the head of UNESCO, the main UN agency dealing with water, will require fundamental changes of behaviour. That means changing incentives, improving information flows, and improving the way water use is governed. All that will be hard.

Water is rarely priced in ways that reflect supply and demand. Usually, water pricing simply means that city dwellers pay for the cost of the pipes that transport it and the sewerage plants that clean it.

Basic information about who uses how much water is lacking. Rainwater and river flows can be measured with some accuracy. But the amount pumped out of lakes is a matter of guesswork and information on how much is taken from underground aquifers is almost completely lacking.

The governance of water is also a mess. Until recently, few poor countries treated it as a scarce resource, nor did they think about how it would affect their development projects. They took it for granted.

Alongside this insouciance goes a Balkanised decision-making process, with numerous overlapping authorities responsible for different watersheds, sanitation plants and irrigation. To take a small example, the modest town of Charlottesville in Virginia has 13 water authorities.

Not surprisingly, investment in water has been patchy and neglected. Aid to developing countries for water was flat in real terms between 1990 and 2005. Within that period, there was a big shift from irrigation to drinking water and sanitation—understandable no doubt, but this meant less aid was going to the main users of water, farmers in poor countries. Aid for irrigation projects in 2002-05 was less than half what it had been in 1978-81. Angel GurrĂ­a, the head of the Organisation for Economic Co-operation and Development, talks of “a crisis in water financing”.

As is often the way, business is ahead of governments in getting to grips with waste. Big drinks companies such as Coca Cola have set themselves targets to reduce the amount of water they use in making their products (in Coke’s case, by 20% by 2012). The Nature Conservancy, an ecologically-minded NGO, is working on a certification plan which aims to give companies and businesses seals of approval (a bit like the Fairtrade symbol) according to how efficiently they use water. The plan is supposed to get going in 2010. That sort of thing is a good start, but just one step in a long process that has barely begun.

Thursday, April 23, 2009

US and Green Protectionism

The US move to become "greener" may have wider political implications. Such protests were not unexpected but China has a point.

Chinese official warns US on protectionism [FT]

A top adviser to the Chinese government on Tuesday warned that a proposed US border tax on carbon sensitive materials “smells of protectionism” and could spark retaliation from developing countries.

During a speech at New York University about how the US and China can forge a closer partnership, Tung Chee-hwa, vice-chairman of the Chinese People’s Political Consultative Conference (CPPCC), the Chinese government’s official advisory, said that a proposed “border adjustment” programme could be challenged through the World Trade Organisation and that he was “distressed” by the new bill introduced to Congress.

The programme in question was introduced earlier this month by two powerful Democrats in the House of Representatives. The bill includes aggressive climate targets to be met through a green house gas emissions cap and trade programme, where companies would be eligible for rebates to compensate for cost they incur. More controversially, the US government would be able to levy import taxes on foreign manufacturers to cover carbon contained in US-bound products.

“This is particularly unfair to China,” Mr Tung, who was chief executive of Hong Kong from 1997 until 2005, said.

In March, Steven Chu, US energy secretary, told Congress that a carbon border tax would help “level the playing field” with countries with looser carbon standards.

The legislation, introduced by Henry Waxman, California Democrat and chairman of the Energy and Commerce Committee and Edward Markey, Democrat from Massachusetts and Chairman of the Energy and Environment Subcommittee, aims to cut green house gas emissions by 20 per cent by 2020 and by more than 80 per cent by 2050, from 2005 levels.

The draft proposal would require electricity suppliers to get 25 per cent of their power from renewable sources, such as wind and solar, by 2025. It would establish a national renewable energy standard and an energy efficiency standard aimed at cutting power demand by 15 per cent by 2020 and natural gas demand by 10 per cent.

On Tuesday Mr Tung said that China was taking its own aggressive measures to combat climate change but that he was concerned about the US taking a more protectionist stance.

“The lesson from 1929 was that we went to protectionism and the whole world collapsed,” he said. “China and America are on the same boat.”

A vote could on the border tax bill could come as early as June, with the Senate expected to make its proposal in the autumn.


Wednesday, April 22, 2009

"Controversies in the Economics of Climate Change." Geoffrey Heal at the LSE 6th May 2009

From the inbox:

I am delighted to invite you to a Grantham Research Institute public lecture, to be given by Professor Geoffrey Heal on Wednesday 6 May 2009. The lecture is entitled Controversies in the Economics of Climate Change.

The Stern Review stirred up the controversy surrounding the economics of climate change. This lecture will review these issues and give an assessment of the debate – where it is leading and what issues remain open.

Geoffrey Heal is a visiting professor at the Grantham Research Institute on Climate Change and the Environment at LSE, Paul Garrett Professor of Public Policy and Business Responsibility, and professor of finance and economics at Columbia Business School.

This event will take place from 6.30-8pm in the Hong Kong Theatre, Clement House, LSE, Aldwych. If you would like to attend this event, please email me on


The truth about energy saving. Is it really so pointless?

From the inbox:

Cambridge University physicist, David MacKay, in a passionate, personal analysis of the energy crisis in the UK, in which he comes to some surprising conclusions about the way forward. The film is based on his new book ‘Sustainable Energy – without the hot air’, in which Prof MacKay has crunched the numbers, comparing renewables such as wind, wave, tide, and solar, and nuclear power with our current consumption of fossil fuels like coal, gas and oil.

A few interesting stats:

All the energy saved in switching off your charger for one day is used up in one second of car-driving. The energy saved in switching off the charger for one year is equal to the energy in a single hot bath.

To provide one quarter of our current energy consumption by growing energy crops would require 75% of Britain to be covered with biomass plantations. To provide 4% of our current energy consumption from wave power would require 500 km of Atlantic coastline to be completely filled with wave farms.

If you fly to Cape Town and back once per year, the energy you use in that trip is nearly as big as the energy used by driving an average car 50 km per day, every day, all year.

Driving an average car 50 km per day uses 40 kWh per day. Covering 10% of the country with wind farms would yield 20 kWh per day per person on average.

MacKay takes a hard look at what we need to do to overcome our fossil fuel addiction: “There’s no shortage of advice on how to ‘make a difference,’ but the public is confused, uncertain whether these schemes are fixes or figleaves. Numbers are chosen to impress, to score points in arguments, rather than to inform. In contrast, my aim here is to present honest, factual numbers in such a way that the numbers are comprehensible, comparable, and memorable. The numbers are made accessible by expressing them all in everyday personal units.”

For more information – go to David MacKay’s website:


Tuesday, April 21, 2009

Carbon will kill us all

This article from Peter Huber is fantastically bleak and makes great reading. It is refreshing to see someone talking about the reality of climate change and just how hard (and expensive) it will be to do anything about it.

This is the dismal science at its most dismal. It is hard to get away from the conclusion that we are all inevitably doomed.

This article is long but unmissable,

We Cannot Make a Dent in Global Carbon Emissions [Opposing views]

Like medieval priests, today’s carbon brokers will sell you an indulgence that forgives your carbon sins. It will run you about $500 for 5 tons of forgiveness—about how much the typical American needs every year. Or about $2,000 a year for a typical four-person household. Your broker will spend the money on such things as reducing methane emissions from hog farms in Brazil.

But if you really want to make a difference, you must send a check large enough to forgive the carbon emitted by four poor Brazilian households, too—because they’re not going to do it themselves. To cover all five households, then, send $4,000. And you probably forgot to send in a check last year, and you might forget again in the future, so you’d best make it an even $40,000, to take care of a decade right now. If you decline to write your own check while insisting that to save the world we must ditch the carbon, you are just burdening your already sooty soul with another ton of self-righteous hypocrisy. And you can’t possibly afford what it will cost to forgive that.

If making carbon this personal seems rude, then think globally instead. During the presidential race, Barack Obama was heard to remark that he would bankrupt the coal industry. No one can doubt Washington’s power to bankrupt almost anything—in the United States. But China is adding 100 gigawatts of coal-fired electrical capacity a year. That’s another whole United States’ worth of coal consumption added every three years, with no stopping point in sight. Much of the rest of the developing world is on a similar path.

Cut to the chase. We rich people can’t stop the world’s 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach. We can’t even make any durable dent in global emissions—because emissions from the developing world are growing too fast, because the other 80 percent of humanity desperately needs cheap energy, and because we and they are now part of the same global economy. What we can do, if we’re foolish enough, is let carbon worries send our jobs and industries to their shores, making them grow even faster, and their carbon emissions faster still.

We don’t control the global supply of carbon.

Ten countries ruled by nasty people control 80 percent of the planet’s oil reserves—about 1 trillion barrels, currently worth about $40 trillion. If $40 trillion worth of gold were located where most of the oil is, one could only scoff at any suggestion that we might somehow persuade the nasty people to leave the wealth buried. They can lift most of their oil at a cost well under $10 a barrel. They will drill. They will pump. And they will find buyers. Oil is all they’ve got.

Poor countries all around the planet are sitting on a second, even bigger source of carbon—almost a trillion tons of cheap, easily accessible coal. They also control most of the planet’s third great carbon reservoir—the rain forests and soil. They will keep squeezing the carbon out of cheap coal, and cheap forest, and cheap soil, because that’s all they’ve got. Unless they can find something even cheaper. But they won’t—not any time in the foreseeable future.

We no longer control the demand for carbon, either. The 5 billion poor—the other 80 percent—are already the main problem, not us. Collectively, they emit 20 percent more greenhouse gas than we do. We burn a lot more carbon individually, but they have a lot more children. Their fecundity has eclipsed our gluttony, and the gap is now widening fast. China, not the United States, is now the planet’s largest emitter. Brazil, India, Indonesia, South Africa, and others are in hot pursuit. And these countries have all made it clear that they aren’t interested in spending what money they have on low-carb diets. It is idle to argue, as some have done, that global warming can be solved—decades hence—at a cost of 1 to 2 percent of the global economy. Eighty percent of the global population hasn’t signed on to pay more than 0 percent.

Accepting this last, self-evident fact, the Kyoto Protocol divides the world into two groups. The roughly 1.2 billion citizens of industrialized countries are expected to reduce their emissions. The other 5 billion—including both China and India, each of which is about as populous as the entire Organisation for Economic Co-operation and Development—aren’t. These numbers alone guarantee that humanity isn’t going to reduce global emissions at any point in the foreseeable future—unless it does it the old-fashioned way, by getting poorer. But the current recession won’t last forever, and the long-term trend is clear. Their populations and per-capita emissions are rising far faster than ours could fall under any remotely plausible carbon-reduction scheme.

Might we simply buy their cooperation? Various plans have circulated for having the rich pay the poor to stop burning down rain forests and to lower greenhouse-gas emissions from primitive agricultural practices. But taking control of what belongs to someone else ultimately means buying it. Over the long term, we would in effect have to buy up a large fraction of all the world’s forests, soil, coal, and oil—and then post guards to make sure that poor people didn’t sneak in and grab all the carbon anyway. Buying off people just doesn’t fly when they outnumber you four to one.

Might we instead manage to give the world something cheaper than carbon? The moon-shot law of economics says yes, of course we can. If we just put our minds to it, it will happen. Atom bomb, moon landing, ultracheap energy—all it takes is a triumph of political will.

Really? For the very poorest, this would mean beating the price of the free rain forest that they burn down to clear land to plant a subsistence crop. For the slightly less poor, it would mean beating the price of coal used to generate electricity at under 3 cents per kilowatt-hour.

And with one important exception, which we will return to shortly, no carbon-free fuel or technology comes remotely close to being able to do that. Fossil fuels are extremely cheap because geological forces happen to have created large deposits of these dense forms of energy in accessible places. Find a mountain of coal, and you can just shovel gargantuan amounts of energy into the boxcars.

Shoveling wind and sun is much, much harder. Windmills are now 50-story skyscrapers. Yet one windmill generates a piddling 2 to 3 megawatts. A jumbo jet needs 100 megawatts to get off the ground; Google is building 100-megawatt server farms. Meeting New York City’s total energy demand would require 13,000 of those skyscrapers spinning at top speed, which would require scattering about 50,000 of them across the state, to make sure that you always hit enough windy spots. To answer the howls of green protest that inevitably greet realistic engineering estimates like these, note that real-world systems must be able to meet peak, not average, demand; that reserve margins are essential; and that converting electric power into liquid or gaseous fuels to power the existing transportation and heating systems would entail substantial losses. What was Mayor Bloomberg thinking when he suggested that he might just tuck windmills into Manhattan? Such thoughts betray a deep ignorance about how difficult it is to get a lot of energy out of sources as thin and dilute as wind and sun.

It’s often suggested that technology improvements and mass production will sharply lower the cost of wind and solar. But engineers have pursued these technologies for decades, and while costs of some components have fallen, there is no serious prospect of costs plummeting and performance soaring as they have in our laptops and cell phones. When you replace conventional with renewable energy, everything gets bigger, not smaller—and bigger costs more, not less. Even if solar cells themselves were free, solar power would remain very expensive because of the huge structures and support systems required to extract large amounts of electricity from a source so weak that it takes hours to deliver a tan.

This is why the (few) greens ready to accept engineering and economic reality have suddenly emerged as avid proponents of nuclear power. In the aftermath of the Three Mile Island accident—which didn’t harm anyone, and wouldn’t even have damaged the reactor core if the operators had simply kept their hands off the switches and let the automatic safety systems do their job—ostensibly green antinuclear activists unwittingly boosted U.S. coal consumption by about 400 million tons per year. The United States would be in compliance with the Kyoto Protocol today if we could simply undo their handiwork and conjure back into existence the nuclear plants that were in the pipeline in nuclear power’s heyday. Nuclear power is fantastically compact, and—as America’s nuclear navy, several commercial U.S. operators, France, Japan, and a handful of other countries have convincingly established—it’s both safe and cheap wherever engineers are allowed to get on with it.

But getting on with it briskly is essential, because costs hinge on the huge, up-front capital investment in the power plant. Years of delay between the capital investment and when it starts earning a return are ruinous. Most of the developed world has made nuclear power unaffordable by surrounding it with a regulatory process so sluggish and unpredictable that no one will pour a couple of billion dollars into a new plant, for the good reason that no one knows when (or even if) the investment will be allowed to start making money.

And countries that don’t trust nuclear power on their own soil must hesitate to share the technology with countries where you never know who will be in charge next year, or what he might decide to do with his nuclear toys. So much for the possibility that cheap nuclear power might replace carbon-spewing sources of energy in the developing world. Moreover, even India and China, which have mastered nuclear technologies, are deploying far more new coal capacity.

Remember, finally, that most of the cost of carbon-based energy resides not in the fuels but in the gigantic infrastructure of furnaces, turbines, and engines. Those costs are sunk, which means that carbon-free alternatives—with their own huge, attendant, front-end capital costs—must be cheap enough to beat carbon fuels that already have their infrastructure in place. That won’t happen in our lifetimes.

Another argument commonly advanced is that getting over carbon will, nevertheless, be comparatively cheap, because it will get us over oil, too—which will impoverish our enemies and save us a bundle at the Pentagon and the Department of Homeland Security. But uranium aside, the most economical substitute for oil is, in fact, electricity generated with coal. Cheap coal-fired electricity has been, is, and will continue to be a substitute for oil, or a substitute for natural gas, which can in turn substitute for oil. By sharply boosting the cost of coal electricity, the war on carbon will make us more dependent on oil, not less.

The first place where coal displaces oil is in the electric power plant itself. When oil prices spiked in the early 1980s, U.S. utilities quickly switched to other fuels, with coal leading the pack; the coal-fired plants now being built in China, India, and other developing countries are displacing diesel generators. More power plants burning coal to produce cheap electricity can also mean less natural gas used to generate electricity. And less used for industrial, commercial, and residential heating, welding, and chemical processing, as these users switch to electrically powered alternatives. The gas that’s freed up this way can then substitute for diesel fuel in heavy trucks, delivery vehicles, and buses. And coal-fired electricity will eventually begin displacing gasoline, too, as soon as plug-in hybrid cars start recharging their batteries directly from the grid.

To top it all, using electricity generated in large part by coal to power our passenger cars would lower carbon emissions—even in Indiana, which generates 75 percent of its electricity with coal. Big power plants are so much more efficient than the gasoline engines in our cars that a plug-in hybrid car running on electricity supplied by Indiana’s current grid still ends up more carbon-frugal than comparable cars burning gasoline in a conventional engine under the hood. Old-guard energy types have been saying this for decades. In a major report released last March, the World Wildlife Fund finally concluded that they were right all along.

But true carbon zealots won’t settle for modest reductions in carbon emissions when fat targets beckon. They see coal-fired electricity as the dragon to slay first. Huge, stationary sources can’t run or hide, and the cost of doing without them doesn’t get rung up in plain view at the gas pump. California, Pennsylvania, and other greener-than-thou states have made flatlining electricity consumption the linchpin of their war on carbon. That is the one certain way to halt the displacement of foreign oil by cheap, domestic electricity.

The oil-coal economics come down to this. Per unit of energy delivered, coal costs about one-fifth as much as oil—but contains one-third more carbon. High carbon taxes (or tradable permits, or any other economic equivalent) sharply narrow the price gap between oil and the one fuel that can displace it worldwide, here and now. The oil nasties will celebrate the green war on carbon as enthusiastically as the coal industry celebrated the green war on uranium 30 years ago.

The other 5 billion are too poor to deny these economic realities. For them, the price to beat is 3-cent coal-fired electricity. China and India won’t trade 3-cent coal for 15-cent wind or 30-cent solar. As for us, if we embrace those economically frivolous alternatives on our own, we will certainly end up doing more harm than good.

By pouring money into anything-but-carbon fuels, we will lower demand for carbon, making it even cheaper for the rest of the world to buy and burn. The rest will use cheaper energy to accelerate their own economic growth. Jobs will go where energy is cheap, just as they go where labor is cheap. Manufacturing and heavy industry require a great deal of energy, and in a global economy, no competitor can survive while paying substantially more for an essential input. The carbon police acknowledge the problem and talk vaguely of using tariffs and such to address it. But carbon is far too deeply embedded in the global economy, and materials, goods, and services move and intermingle far too freely, for the customs agents to track.

Consider your next Google search. As noted in a recent article in Harper’s, “Google . . . and its rivals now head abroad for cheaper, often dirtier power.” Google itself (the “don’t be evil” company) is looking to set up one of its electrically voracious server farms at a site in Lithuania, “disingenuously described as being near a hydroelectric dam.” But Lithuania’s grid is 0.5 percent hydroelectric and 78 percent nuclear. Perhaps the company’s next huge farm will be “near” the Three Gorges Dam in China, built to generate over three times as much power as our own Grand Coulee Dam in Washington State. China will be happy to play along, while it quietly plugs another coal plant into its grid a few pylons down the line. All the while, of course, Google will maintain its low-energy headquarters in California, a state that often boasts of the wise regulatory policies—centered, one is told, on efficiency and conservation—that have made it such a frugal energy user. But in fact, sky-high prices have played the key role, curbing internal demand and propelling the flight from California of power plants, heavy industries, chip fabs, server farms, and much else (see “California’s Potemkin Environmentalism,” Spring 2008).

So the suggestion that we can lift ourselves out of the economic doldrums by spending lavishly on exceptionally expensive new sources of energy is absurd. “Green jobs” means Americans paying other Americans to chase carbon while the rest of the world builds new power plants and factories. And the environmental consequences of outsourcing jobs, industries, and carbon to developing countries are beyond dispute. They use energy far less efficiently than we do, and they remain almost completely oblivious to environmental impacts, just as we were in our own first century of industrialization. A massive transfer of carbon, industry, and jobs from us to them will raise carbon emissions, not lower them.

The grand theory for how the developed world can unilaterally save the planet seems to run like this. We buy time for the planet by rapidly slashing our own emissions. We do so by developing carbon-free alternatives even cheaper than carbon. The rest of the world will then quickly adopt these alternatives, leaving most of its trillion barrels of oil and trillion tons of coal safely buried, most of the rain forests standing, and most of the planet’s carbon-rich soil undisturbed. From end to end, however, this vision strains credulity.

Perhaps it’s the recognition of that inconvenient truth that has made the anti-carbon rhetoric increasingly apocalyptic. Coal trains have been analogized to boxcars headed for Auschwitz. There is talk of the extinction of all humanity. But then, we have heard such things before. It is indeed quite routine, in environmental discourse, to frame choices as involving potentially infinite costs on the green side of the ledger. If they really are infinite, no reasonable person can quibble about spending mere billions, or even trillions, on the dollar side, to dodge the apocalyptic bullet.

Thirty years ago, the case against nuclear power was framed as the “Zero-Infinity Dilemma.” The risks of a meltdown might be vanishingly small, but if it happened, the costs would be infinitely large, so we should forget about uranium. Computer models demonstrated that meltdowns were highly unlikely and that the costs of a meltdown, should one occur, would be manageable—but greens scoffed: huge computer models couldn’t be trusted. So we ended up burning much more coal. The software shoe is on the other foot now; the machines that said nukes wouldn’t melt now say that the ice caps will. Warming skeptics scoff in turn, and can quite plausibly argue that a planet is harder to model than a nuclear reactor. But that’s a detail. From a rhetorical perspective, any claim that the infinite, the apocalypse, or the Almighty supports your side of the argument shuts down all further discussion.

To judge by actions rather than words, however, few people and almost no national governments actually believe in the infinite rewards of exorcising carbon from economic life. Kyoto has hurt the anti-carbon mission far more than carbon zealots seem to grasp. It has proved only that with carbon, governments will say and sign anything—and then do less than nothing. The United States should steer well clear of such treaties because they are unenforceable, routinely ignored, and therefore worthless.

If we’re truly worried about carbon, we must instead approach it as if the emissions originated in an annual eruption of Mount Krakatoa. Don’t try to persuade the volcano to sign a treaty promising to stop. Focus instead on what might be done to protect and promote the planet’s carbon sinks—the systems that suck carbon back out of the air and bury it. Green plants currently pump 15 to 20 times as much carbon out of the atmosphere as humanity releases into it—that’s the pump that put all that carbon underground in the first place, millions of years ago. At present, almost all of that plant-captured carbon is released back into the atmosphere within a year or so by animal consumers. North America, however, is currently sinking almost two-thirds of its carbon emissions back into prairies and forests that were originally leveled in the 1800s but are now recovering. For the next 50 years or so, we should focus on promoting better land use and reforestation worldwide. Beyond that, weather and the oceans naturally sink about one-fifth of total fossil-fuel emissions. We should also investigate large-scale options for accelerating the process of ocean sequestration.

Carbon zealots despise carbon-sinking schemes because, they insist, nobody can be sure that the sunk carbon will stay sunk. Yet everything they propose hinges on the assumption that carbon already sunk by nature in what are now hugely valuable deposits of oil and coal can be kept sunk by treaty and imaginary cheaper-than-carbon alternatives. This, yet again, gets things backward. We certainly know how to improve agriculture to protect soil, and how to grow new trees, and how to maintain existing forests, and we can almost certainly learn how to mummify carbon and bury it back in the earth or the depths of the oceans, in ways that neither man nor nature will disturb. It’s keeping nature’s black gold sequestered from humanity that’s impossible.

If we do need to do something serious about carbon, the sequestration of carbon after it’s burned is the one approach that accepts the growth of carbon emissions as an inescapable fact of the twenty-first century. And it’s the one approach that the rest of the world can embrace, too, here and now, because it begins with improving land use, which can lead directly and quickly to greater prosperity. If, on the other hand, we persist in building green bridges to nowhere, we will make things worse, not better. Good intentions aren’t enough. Turned into ineffectual action, they can cost the earth and accelerate its ruin at the same time.

Use Energy, Get Rich and Save the Planet (OR DIE TRYING)

Good to see the much maligned Kuznets curve getting its annual airing on earth day from none other than the New York Times.

Use Energy, Get Rich and Save the Planet [New York Times]

When the first Earth Day took place in 1970, American environmentalists had good reason to feel guilty. The nation's affluence and advanced technology seemed so obviously bad for the planet that they were featured in a famous equation developed by the ecologist Paul Ehrlich and the physicist John P. Holdren, who is now President Obama's science adviser.

Their equation was I=PAT, which means that environmental impact is equal to population multiplied by affluence multiplied by technology. Protecting the planet seemed to require fewer people, less wealth and simpler technology - the same sort of social transformation and energy revolution that will be advocated at many Earth Day rallies on Wednesday.

But among researchers who analyze environmental data, a lot has changed since the 1970s. With the benefit of their hindsight and improved equations, I'll make a couple of predictions:

1. There will be no green revolution in energy or anything else. No leader or law or treaty will radically change the energy sources for people and industries in the United States or other countries. No recession or depression will make a lasting change in consumers' passions to use energy, make money and buy new technology - and that, believe it or not, is good news, because...

2. The richer everyone gets, the greener the planet will be in the long run.

I realize this second prediction seems hard to believe when you consider the carbon being dumped into the atmosphere today by Americans, and the projections for increasing emissions from India and China as they get richer.

Those projections make it easy to assume that affluence and technology inflict more harm on the environment. But while pollution can increase when a country starts industrializing, as people get wealthier they can afford cleaner water and air. They start using sources of energy that are less carbon-intensive - and not just because they're worried about global warming. The process of "decarbonization" started long before Al Gore was born.

The old wealth-is-bad IPAT theory may have made intuitive sense, but it didn't jibe with the data that has been analyzed since that first Earth Day. By the 1990s, researchers realized that graphs of environmental impact didn't produce a simple upward-sloping line as countries got richer. The line more often rose, flattened out and then reversed so that it sloped downward, forming the shape of a dome or an inverted U - what's called a Kuznets curve. (See for an example.)

In dozens of studies, researchers identified Kuznets curves for a variety of environmental problems. There are exceptions to the trend, especially in countries with inept governments and poor systems of property rights, but in general, richer is eventually greener. As incomes go up, people often focus first on cleaning up their drinking water, and then later on air pollutants like sulfur dioxide.

As their wealth grows, people consume more energy, but they move to more efficient and cleaner sources - from wood to coal and oil, and then to natural gas and nuclear power, progressively emitting less carbon per unit of energy. This global decarbonization trend has been proceeding at a remarkably steady rate since 1850, according to Jesse Ausubel of Rockefeller University and Paul Waggoner of the Connecticut Agricultural Experiment Station.

"Once you have lots of high-rises filled with computers operating all the time, the energy delivered has to be very clean and compact," said Mr. Ausubel, the director of the Program for the Human Environment at Rockefeller. "The long-term trend is toward natural gas and nuclear power, or conceivably solar power. If the energy system is left to its own devices, most of the carbon will be out of it by 2060 or 2070."

But what about all the carbon dioxide being spewed out today by Americans commuting to McMansions? Well, it's true that American suburbanites do emit more greenhouse gases than most other people in the world (although New Yorkers aren't much different from other affluent urbanites).

But the United States and other Western countries seem to be near the top of a Kuznets curve for carbon emissions and ready to start the happy downward slope. The amount of carbon emitted by the average American has remained fairly flat for the past couple of decades, and per capita carbon emissions have started declining in some countries, like France. Some researchers estimate that the turning point might come when a country's per capita income reaches $30,000, but it can vary widely, depending on what fuels are available. Meanwhile, more carbon is being taken out of the atmosphere by the expanding forests in America and other affluent countries.

Deforestation follows a Kuznets curve, too. In poor countries, forests are cleared to provide fuel and farmland, but as people gain wealth and better agricultural technology, the farm fields start reverting to forestland.
Of course, even if rich countries' greenhouse impact declines, there will still be an increase in carbon emissions from China, India and other countries ascending the Kuznets curve. While that prospect has environmentalists lobbying for global restrictions on greenhouse gases, some economists fear that a global treaty could ultimately hurt the atmosphere by slowing economic growth, thereby lengthening the time it takes for poor countries to reach the turning point on the curve.

But then, is there much reason to think that countries at different stages of the Kuznets curve could even agree to enforce tough restrictions? The Kyoto treaty didn't transform Europe's industries or consumers. While some American environmentalists hope that the combination of the economic crisis and a new president can start an era of energy austerity and green power, Mr. Ausubel says they're hoping against history.

Over the past century, he says, nothing has drastically altered the long-term trends in the way Americans produce or use energy - not the Great Depression, not the world wars, not the energy crisis of the 1970s or the grand programs to produce alternative energy.

"Energy systems evolve with a particular logic, gradually, and they don't suddenly morph into something different," Mr. Ausubel says. That doesn't make for a rousing speech on Earth Day. But in the long run, a Kuznets curve is more reliable than a revolution.

Further Reading

"Environmental Kuznets Curves." B. Yandle, M. Bhattarai, M. Vijayaraghavan. PERC, 2004.

"Dematerialization." J.H. Ausubel, P.E. Waggoner, PNAS, 2008

"Economic Growth and the Environment." A.B. Krueger, G. Grossman. Quarterly Journal of Economics, 1995.

"Governance, Institutions and the Environment-Income Relationship." K. Dutt. Environment, Development and Sustainability, 2008.

"The Jack Rabbit of Depression, or Do economic slumps benefit environment?" (pdf). J. Ausubel, P.E. Waggoner. Working paper, 2009.

"The IPAT Equation and Its Variants." (pdf) M.R. Chertow. Journal of Industrial Ecology, 2001.


The cost of climate change in Africa

The costs were always going to be larger than many predicted. Given these figures will never be paid the only point of this article is to get an idea of how bad things are going to get.

Africa Says Poor Need Billions To Fight Climate Fight [PlanetArk]

OSLO - Developing nations will need at least $267 billion a year by 2020 to fight climate change and adapt to droughts, heat waves and rising seas, according to African nations.

The figure, part of a new African text for negotiations on a U.N. climate treaty, is more than double current development aid from recession-hit rich nations which totaled a record $120 billion in 2008.

"Africa is one of the most vulnerable continents to climate change, with major development and poverty eradication challenges and limited capacity for adaptation," according to the text submitted to the U.N. Climate Change Secretariat.

It set a 2020 goal of $200 billion in investments to help all developing nations curb their rising greenhouse gas emissions -- for instance via energy efficiency or shifting from use of coal or oil toward renewable wind or solar power.

The African Group, comprising more than 50 nations, said those flows totaled about 0.5 percent of the gross domestic product of developed nations. Cash needed to help developing nations adapt to climate change, such as building stronger defenses against rising sea levels or developing drought-resistant crops, needs to be at least $67 billion a year by 2020.

The numbers are above levels of aid discussed by rich nations to curb greenhouse gas emissions, mainly from burning fossil fuels.

A report by the European Commission in January said the worldwide costs of fighting climate change would be around 175 billion euros ($227.1 billion) a year by 2020.

"It shows the scale of what's needed," Kathrin Gutmann, head of policy of the WWF environmental group's global climate initiative, said of the African text. "We're not talking about tens of billions of dollars -- it's far more."


"There's a very strange chicken and egg situation," Gutmann said. Rich nations want the poor to lay out their plans for fighting climate change before promising cash. The poor want funds pledged first before deciding what is achievable.

The next U.N. climate talks, part of a series meant to end in Copenhagen in December with a new pact to succeed the U.N.'s Kyoto Protocol, are set for June 1-12 in Bonn, Germany.

The African group also said developed nations should cut emissions by at least 40 percent below 1990 levels by 2020 and by 80-95 percent below 1990 levels by 2050. The numbers are beyond goals by almost all developed countries.

"At lower stabilization levels, the additional climate impacts are unacceptable to Africa," it said.

The U.N. Climate Panel projects that up to 250 million people in Africa could face greater stress on water supplies by 2020 and that yields from rain-fed agriculture could fall by up to 50 percent by 2020 in some African nations.


Monday, April 13, 2009

Does greenwashing show the dirt?

I have written an increasing number of firm level "environmental economics" papers and this is an interesting twist on the story.

Why Greenwashing Hurts Even the Most Eco-Friendly Businesses[]

Your business has been designing more environmentally friendly products for the past 15 years. Your marketing team is trained to make accurate and truthful environmental claims about your products. Your company wholeheartedly believes in its sustainability efforts. Think you're immune to the effects of greenwashing? Guess again.

The fact of the matter is greenwashing affects all companies, including those that are making a concerted environmental effort, by degrading consumer confidence. The effort your company makes is hampered by competitors when they mislead the public.

According to the 2008 Eco Pulse survey conducted by the Shelton Group, when asked why most companies that adopt environmentally friendly practices do so, the most common response was "to make their company look better to the public." Only 13 percent of respondents answered "because their owners/shareholders care about the environment."

So what can you do to address this problem and increase the credibility of your company's environmental claims?

First, it's important to recognize that this is a broad problem, affecting every environmentally conscious company in every industry imaginable. The problem won't be solved overnight and it certainly won't be solved with a single company's efforts.

The somewhat newly revised Federal Trade Commission's "Guides for the Use of Environmental Marketing Claims" are a great starting point for at least creating a frame of reference, but unfortunately it is near impossible for the guides to be properly and broadly enforced. The ISO 14021 standard for self-declared environmental claims, along with newer efforts in development from associations such as ASTM are also great points of reference, but unfortunately these are voluntary standards. As a result, environmentally responsible companies follow these guides, while greenwashers continue to proliferate.

Transparency is the key to addressing the problem and restoring consumer confidence of environmental claims. Third-party certification of sustainable products and environmental claims adds an extra layer of credibility to a company's marketing.

For companies that are self-declaring environmental claims, even those that follow standard guidelines, consumer mistrust still looms. A 2008 PriceWaterhouse Coopers survey validated that only 16 percent of consumers trust the environmental claims from manufacturers.

There are dozens of efforts ongoing from standard developers, NGOs, third-party certifiers, industry associations and others that seek to create transparent standards to bring back consumer trust in environmental claims.

There are two critical pieces that must be in place in order for these to succeed:

• First, the standards need to be developed in an open consensus manner with a large and diverse group of stakeholders.
• Second, the standards need to be reliable, repeatable, rigorous, and balance stringent criteria with current technology and commercial feasibility.

As these standards proliferate and truly environmentally conscious businesses jump on-board, then consumers will regain trust in environmental claims and really put their purchasing power into green products.


Wednesday, April 08, 2009

Soap Smugglers

If ever there was an example of why the planet is ultimately doomed one only has to look as far as Spokane in Washington.

I am sure it is not only Americans that are this environmentally selfish but it does feed the flames of discontent with America's apparent lack of enthusiasm of tackling climate change.

However, at the country level it is America's overall desire to have clean rivers and to be at the forefront of environmental regulation that caused the "soap smugglers" in the first place.

The dirty truth: They're smuggling soap in Spokane [LA Times]

Reporting from Spokane, Wash. -- By day, Patti Marcotte is a working mom -- dealing with the balancing act created by a 5-year-old daughter, a demanding job, a split-level house and a willful boxer puppy.

Come the post-dinner hour, however, Marcotte begins operating in the shadowy world of smuggled soap.

Spokane County in July adopted a near total ban on sales of water-softening phosphates in dishwasher detergent -- the first in the nation -- in an attempt to slow the flood of pollutants that is sucking oxygen out of the endangered Spokane River, smothering its fish.

The problem, Marcotte and many of her neighbors say, is that most low-phosphate detergents are wimps when it comes to fighting greasy pots and spaghetti-crusted plates. So she has become a detergent outlaw, driving 45 minutes across the Idaho state line to pick up secret stashes of the old, bad dish cleansers: the brutish Cascades, the muscular Electrasols.

"With the 'green' stuff, the dishes come out with a real slippery texture -- like somebody poured a cup of grease in some dishwater -- and a white film. Just really gross," Marcotte said. "And then the food gunk just mixes around the dishwasher and when it stops, it just settles on whatever's there. I mean, it's bad."

Retailers in Coeur d'Alene, Idaho, say the sight of apologetic but defiant Washingtonians loading their carts with dishwasher detergent is becoming increasingly common. "We go, 'Are you coming from Spokane?' And they kind of chuckle and say, 'Yeah,' " said Donna Wilkinson, an assistant manager at Costco.

For those inclined to chuckle at the travails of distant, desperate people with dirty dishes, consider this: The detergent industry has pledged to make every automatic dishwashing soap sold in the U.S. and Canada nearly phosphate-free by mid-2010.

With 12 states -- including Washington -- phasing in low-phosphate laws by the end of next year and four others considering them, industry officials say they are gearing up to produce a new generation of products that will clean dishes while not harming lakes and streams. (The California Legislature passed a phosphate law last year, but Gov. Arnold Schwarzenegger vetoed it.)

The pledge marks a significant turnaround for an industry that until recently not only opposed such laws but also warned that many phosphate-free dishwashing detergents didn't work the way consumers expected them to.

But plenty soon will be available, said Dennis Griesing, vice president of government affairs for the Washington, D.C.-based Soap and Detergent Assn.

"We sort of warned Spokane that things wouldn't be ready by 2008. We had told people it's not enough time to get our best products out there," Griesing said. "We have to do the R&D, restructure our chemical supply lines, maybe build some new plants.

"This is going to be a national changeover. I can't emphasize this enough."

Two major manufacturers have introduced nearly phosphate-free gels that work well in most water conditions, he said, and more are on the way.

At least some consumers in Spokane seem willing to give it a try.

"I'm not an automatic-dishwasher owner, I'm a hand washer, but I know from doing an unscientific poll among family members, they have no complaints," said state Rep. Timm Ormsby, a Democrat from Spokane who helped shepherd Washington's statewide ban -- which takes effect in July 2010 -- through the Legislature.

The transition echoes the elimination of most phosphates from laundry detergent several years ago, but represents an entirely different technological hurdle. Previous attempts to phase out dishwasher phosphates in Europe and a brief trial in Arizona met with implacable consumer resistance.

But Spokane County authorities say that since the law went into effect, they have reduced phosphate pollution from the county's main wastewater treatment plant by 14%.

Scientists say phosphorus -- a nutrient that is an essential component of living cells, as abundant in human waste and yard fertilizer as it is in detergent -- is one of the biggest threats to lakes and rivers whose waters take in a constant stream of phosphate-laden wastewater discharges, agricultural runoff and storm-water flows.

Acting as a fertilizer in the water, phosphates promote the uncontrolled growth of often-toxic algae blooms that, when they die back, nurture bacteria. That bacteria rapidly consume much of the oxygen in the water, leaving little for plants and fish.

The Spokane River is considered one of the nation's most endangered, threatened by mining pollution, sewage treatment plant outfalls and heavy drawdowns of river water that tend to concentrate pollutants.

In an attempt to turn things around, the state Department of Ecology imposed what appear to be the lowest phosphate limits in the nation on Spokane's main water-reclamation plant. And the county instituted its dishwasher detergent rules two years before the statewide low-phosphate law takes effect.

"We had the misfortune of having a lot of people in a fairly small area on a river that made America's 10 most-imperiled rivers list," said Michael F. Costner, operations manager at the water-reclamation plant.

The plant is spending $7 million to experiment with new technologies for cleaning up remaining phosphates in the wastewater. Spokane County will spend up to $250 million more to build a new treatment plant after that. The state is also looking to crack down on agricultural and industrial polluters, along with leaky septic systems.

The law allows dishwasher detergents to have no more than 0.5% phosphate content. The most popular brands contain about 8% phosphates in order to remove fats and hold food particles in suspension.

Most hand dish soap, which relies mainly on scrubbing to clean plates and pots, does not contain phosphates.

Marcotte says she's environmentally conscious, but the phosphate-free dishwasher detergents she has tried left the dishes so dirty she had to wash them twice, in much hotter water, or at least rinse them after washing them -- a waste of water and electricity, since she normally uses tepid water on the short cycle.

"I try to recycle and do my part," she said.

"The whole thing is, if they're going to take away something that works, they need to replace it with something that works."


What makes a good environmental story? Suicides in trees?

I subscribe to PlanetArk alerts which are both interesting and a cheap way of finding material to blog about. However, I am sometimes perplexed as to their selection criteria for the "Home of World Environment News".

Today's lead article for example is titled:

Skeleton Found In Tree 29 Years After Suicide [PlanetArk]

BERLIN - The skeleton of a German retiree who tied himself to the top of a tree and shot himself to death nearly 30 years ago has been found by a hiker.

German police in the southern town of Landshut said on Monday the 69-year-old man disappeared in 1980 and had been classified as missing.

An 18-year-old hiker discovered a bone in the forest last week and brought it to police. They searched the area and spotted the skeleton hanging about 11 meters up, near the top of the spruce tree.

"After searching the area we found the skeleton up in the tree with the pistol hanging on a rope next to it," police spokesman Leonard Mayer said. Police were able to identify the man through DNA testing and an artificial hip.

Now I must say, this is an interesting story that I could not resist reading. I can only assume that the "environmental" angle is the fact that this poor chap was found in a tree. I am missing something?


Tuesday, April 07, 2009

International Trade in Used Durable Goods: The Environmental Consequences of NAFTA

A catch up on some must read papers in the "globalisation and environment" arena.

The results of this paper appeal as they are exactly what I would expect although the final line of emission increases due to a second life for cars that would otherwise be scrapped is less convincing. Clearly it depends on what happens in Mexico and whether the alternative is merely to prolong the life of even more polluting cars.

International Trade in Used Durable Goods: The Environmental Consequences of NAFTA

Lucas W. Davis
University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)
Matthew E. Kahn
University of California, Los Angeles (UCLA)

December 2008

NBER Working Paper No. w14565

Previous studies of trade and the environment overwhelmingly focus on how trade affects where goods are produced. However, trade also affects where goods are consumed. In this paper we describe a model of trade with durable goods and non-homothetic preferences. In autarky, low-quality (used) goods are relatively inexpensive in high-income countries and free trade causes these goods to be exported to low-income countries. We then evaluate the environmental consequences of this pattern of trade using evidence from the North American Free Trade Agreement. Since trade restrictions were eliminated for used cars in 2005, over 2.5 million used cars have been exported from the United States to Mexico. Using a unique, vehicle-level dataset, we find that traded vehicles are dirtier than the stock of vehicles in the United States and cleaner than the stock in Mexico, so trade leads average vehicle emissions to decrease in both countries. Total greenhouse gas emissions increase, primarily because trade gives new life to vehicles that otherwise would have been scrapped.

JEL Classifications: F18
Working Paper Series


Monday, April 06, 2009

The deer cost of condor protection in China

Any environmentally interesting play on words deserves a blog post in my opinion. Was I remiss enough to spell dear incorrectly or is this a strange mammal-bird related story?

Thankfully it is the latter. I am also keen on any story that includes the word "raptor" in context of which there are too few (stories and raptors).

An interesting case of unexpected consequences.

I particularly like the vision of condors putting up two feathers (or indeed flipping the bird) to the wardens who are trying to scare them and eating the deer anyway.

China Pays Deer Price For Condor Protection [PlanetArk]

BEIJING - Chinese conservationists are in a fix over endangered condors eating large numbers of a protected species of deer in a reserve in the north of the country, state media said on Friday.

More than 100 young spotted deer have been eaten by the condors so far this spring at the Luanhe River National Nature Reserve in Hebei province, near Beijing, the official Xinhua news agency said, becoming an "unanticipated" part of the food chain.

Nationally, the condor is considered far more endangered than the deer.

"The raptors are growing in number and threatening to catch larger animals, like elk, in the reserve," it quoted wildlife official Zhou Changhong as saying.

The reserve only has 600 or so deer and just 10 elk, the report added.

"An adult condor has a wingspan of more than two metres, and not even wardens can frighten it," Zhou said.

He added that wardens hoped to organise patrols to stop the condors from eating too many of the deer.


How much can economists earn?

In the US academic economists are paid considerably more than their UK counterparts.

This breakdown of Larry Summers' pay last year goes some way to explaining why. The market decides.

With the hedge fund collapes I suspect this amount will be lower this year.

Financial Industry Paid Millions to Obama Aide [New York Times]

WASHINGTON — Lawrence H. Summers, the top economic adviser to President Obama, earned more than $5 million last year from the hedge fund D. E. Shaw and collected $2.7 million in speaking fees from Wall Street companies that received government bailout money, the White House disclosed Friday in releasing financial information about top officials.


Friday, April 03, 2009

G20 and the environment II: Monbiot's return

Sadly I am too busy to comment at length on the G20-environment debate so I will let George take over.

On a purely "G20 save the world" note am I the only economist who believes the latest moves will do little to help? The way I see it is that the trillion dollars just allows those countries addicted to gambling to keep on gambling. Low interest rates encourage households to gamble on riskier investments instead of saving.

Capitalism is about capital - the lack of incentive to save means individuals taking even more risk.

After a party this size of the one the global economy has had over the last ten years the hangover was always going to be bad. The current solution may stop the very worst of it but may well mean that the hangover goes on for longer.

Still, there are some good idea and the tax haven solution is one of them but these are long term solutions to stop this happening again. There is no danger of that for a while.

Over to George on the environment who is as always spot on. A great piece on the current farce over bank bailouts.

Once we are well and truly past the planet's tipping point there can be no "planet bailout" however much money we throw at it assuming we return to our path of unstustainable growth.

G20 forgets the environment [Guardian]

Here is the text of the G20 communique, in compressed form.

"We, the Leaders of the Group of Twenty, will use every cent we don't possess to rescue corporate capitalism from its contradictions and set the world economy back onto the path of unsustainable growth. We have already spent trillions of dollars of your money on bailing out the banks, so that they can be returned to their proper functions of fleecing the poor and wrecking the Earth's living systems. Now we're going to spend another $1.1 trillion. As an exemplary punishment for their long record of promoting crises, we will give the IMF and the World Bank even more of your money. These actions constitute the greatest mobilisation of resources to support global financial flows in modern times.

Oh - and we nearly forgot. We must do something about the environment. We don't have any definite plans as yet, but we'll think of something in due course."

The G20's strategy for solving the financial and economic crisis, in other words, is detailed, innovative, fully costed and of vast scale and ambition. Its plans for solving the environmental crisis are brief, vague and uncosted. The environmental clauses - which contradict almost everything that goes before - have been tacked onto the end of the communique as an afterthought. No new money has been set aside. No new ideas are proposed; just the usual wishful thinking: let's call the whole package green and hope for the best.

So much for the pledge, expressed in different forms by most of the governments present at the talks, to put the environment at the heart of decision-making. Though the economy is merely a measure of our engagement with the environment; though, as most of the leaders acknowledge, continued prosperity is impossible without sustainability, the communique shows that the environment still comes last. No expense is spared in saving the banks. Every expense is spared in saving the biosphere.

This suggests to me that our leaders have learnt nothing from the financial crisis. It was caused by allowing powerful agents (the banks) to exploit a common resource (the global economy) without proper control or regulation. Governments deployed a form of magical thinking: that the boom would go on forever, that a bunch of predatory psychopaths would regulate themselves, that profits, dividends and share prices could grow indefinitely even though they bore no relation to actual value.

They treat the environmental crisis the same way. Climate breakdown, peak oil and resource depletion will all dwarf the current financial crisis, in both financial and humanitarian terms. But, just as they did with the banks, the G20 leaders appear to have decided to deal with these problems only when they have to - in other words, when it's too late. They persuade themselves that getting the economy back to where it was - infinite growth on a finite planet - can somehow be reconciled with the pledge "to address the threat of irreversible climate change".

Next time this magical thinking fails, there'll be no chance of a bail-out.


Wednesday, April 01, 2009

G20 and the environment

Given that the world's leaders are gathering in London to discuss the current global crisis it will be interesting to see what publicity the "environment" gets. It will certainly be less than one might have expected given the unfolding crisis elsewhere.

Here is a round-up of some of the column inches dedicated to this topic:

America ‘can’t wave magic wand’ on climate change [Times online]

Expectations of what can be achieved by the United States in fighting global warming are unrealistic, climate change negotiators from more than 170 countries have been told.

Hopes raised by a new willingness in the White House to take action to control climate change must be balanced by a realisation that there are limits to what the US can do, they were told.

Todd Stern, President Obama’s special envoy on climate change, moved to play down hopes as the US joined UN talks on global warming in Bonn. These are designed to smooth the path to a summit in Copenhagen in December when it is hoped that international agreement on cutting greenhouse gas emissions can be reached.

Leaders to meet in summer for special climate change talks [Independent]

The new summit – which is being called on the initiative of President Barack Obama as part of a US drive to get a new international agreement on tackling global warming – is to take place alongside the annual G8 gathering of world leaders on the island of La Maddalena off Sardinia.

Scientists and environmentalists will hope that it will make up for a failure by the leaders at this week's meeting to do more than agree warm words about the need for a "green new deal" and the importance of building low-carbon economies. Every nation attending has flatly refused to discuss any commitment to devote an agreed percentage of its financial stimulus package to green measures, insisting instead on focusing on relatively short-term measures to tackle the immediate financial crisis.